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Yanka [14]
2 years ago
8

In one year, Hitech Microdevices will pay a common stock dividend of $4.35. You predict that you will be able to sell your Hitec

h stock for $57 per share after 1 year. If you require a rate of return of 16 percent on Hitech stock, how much would you be willing to pay now for a share of the stock?
Business
1 answer:
Andre45 [30]2 years ago
7 0

Answer:

Price to be paid now = $52.89

Explanation:

<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return. </em>

T<em>he stock would be held for just a period, hence we would use the single period return model. This is given as follows:</em>

Price now  = D/(1+r) + P×(1+r)

Dividend , r - rate of return, P -year-end price of stock

Dividend = 4.35, r-16%, P- 57

Price = 4.35/(1.16)  + 57/(1.16)= $52.89

Price to be paid now = $52.89

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High flyer, inc., wishes to maintain a growth rate of 16 percent per year and a debt-equity ratio of 0.90. the profit margin is
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Answer: The dividend payout ratio is 46.19%.

We follow these steps in order to arrive at the answer:

We begin with the DuPont identity of RoE.

<u>DuPont Identity:</u>

RoE = Net Profit Margin * Asset Turnover Ratio * Equity Multiplier

Now,  

Equity Multiplier = \frac{1}{Debt Ratio}

And Debt Ratio is also expressed as:

Debt Ratio = \frac{D/E}{1+D/E}

where D/E represents the Debt-Equity Ratio.

Substituting the value of D/E ratio from the question in the debt ratio formula above we get,

Debt Ratio = \frac{0.9}{1+0.9}

Debt Ratio = \frac{0.9}{1.9}----(1)

Substituting (1) in the equity multiplier formula above we get,

Equity Multiplier = \frac{1}{\frac{0.9}{1.9}}

Equity Multiplier = \frac{1.9}{0.9}

Substituting Equity Multiplier from above and the relevant numbers from the question in the DuPont identity we get,

RoE = 0.048 * 1.08 * \frac{1.9}{0.9}

RoE = 0.10944

The relationship between RoE and earnings growth rate g is given by the following formula:

RoE = \frac{g}{(1-p)}, where p is the dividend payout ratio.

Plugging in the values in the formula above we get,

0.10944 = \frac{0.16}{(1-p)}

1-p = \frac{0.16}{0.10944}

1-p = 1.461988304

p = 0.461988304 or 46.19%

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2 years ago
Although total world grain production is increasing, per capita production remains flat. what factors have contributed to this s
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Although total world grain production is increasing, per capita production remains flat. The factors that have contributed to this situation are the increasing population of humans, climatic conditions, quality of land cultivation, and the energy to plant and harvest the grain.

In 2019, the USA populace changed to 328 million, even as its financial output turned into valued at $21.43 trillion. To calculate GDP in step with capita, we get the full GDP and divide via the whole population. In this example it is: So in 2019, the GDP per capita of the USA becomes $ 65,335

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According to per capita production intake, the every year use of goods and offerings by using all and sundry is derived through dividing the number of products and offerings utilized by the full populace. This variable serves as a right-away measure of personal monetary well-being. Per capita consumption is stricken by (Jain et al., 2012):

GDP in line with per capita production is the sum of gross cost introduced with the aid of all resident producers within the financial system plus any product taxes (much fewer subsidies) not blanketed within the valuation of output, divided by using mid-yr population. boom is calculated from constant price GDP data in nearby forex.

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Fernandez Corporation purchased a truck at the beginning of 2014 for $50,000. The truck is estimated to have a salvage value of
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